Perspective on performance

Watch as Head of Business Banking at Macquarie Bank, Dean Firth, shares his views on market conditions and how real estate agencies can position for performance in the years to come.

What actions can real estate principals take right now to boost business performance? How can a ‘change’ mindset set you up to thrive into the future? Dean Firth, Head of Business Banking at Macquarie Bank, lays out some practical steps and insights for real estate agencies.

It’s always interesting to look back and assess predictions with the benefit of hindsight. In early 2020, as the pandemic was sweeping the world, plenty of people were making predictions about the real estate industry. The prevailing opinion as lockdowns set in was that real estate agencies were in for a tough time. How would agencies sell or rent properties with the social distancing requirements and without conducting open homes, for instance?

Despite the grim predictions, the industry managed this crisis exceptionally well. Auctions were held via Zoom calls with online bidding, property managers conducted virtual rental checks, digital forms and signatures were embraced and many of those changes have understandably become common practice post pandemic. The pandemic became a catalyst for rapid change. Adaptation was in abundance.

The question is: will real estate leaders and businesses continue to innovate, evolve and try new things? I would argue that they must – crisis or no crisis.

That’s certainly the opinion of Michael Maness, Co-Founder of consulting firm Subculture Systems. Prior to Subculture, Michael was Innovator in Residence at Harvard Business School where he conducted a study that found a pattern that repeats across history, across businesses, its cultures, cities and civilisations. He calls it ‘The Universal Arc’.

The Arc can be seen as a visual representation of the birth, growth and ultimate demise of a business. It begins with a divergent idea (starting a business), peaks as the business arrives at a ‘sustain and defend’ point, and then slips into (ultimately terminal) decline.

In Michael’s experience, issues of complexity and disruption are attributes that surround this demise. Without constant change and commitment to innovation, adaptation and reinvention, stagnation and decline become evident.

The Universal Arc

Source: Michael Maness, Subculture Systems
Source: Michael Maness, Subculture Systems

I respectfully think many real estate businesses are currently in the ‘sustain and defend’ or ‘successful stagnation’ phase. That means they’re in danger of failing through complacency. Getting to the top of the Arc means you have won, or at the very least, you are winning. But if you don’t perpetually change and innovate with more divergent ideas, then disruption will occur and your business will ultimately decline.

Dominant logic is often the killer of innovation, creativity and change. Statements like “that’s not the way we do things around here” reflect a dominant logic mindset. I believe real estate leaders and businesses need to move in the other direction. This means embracing change, acknowledging the need for adaptation and constantly searching for divergent ideas that set the business off on its initial growth trajectory.

So, how do you get there? I think there are three key attributes to understand, accept and embrace if you are going to thrive into the future. These are optimism, context and opportunity.


There are plenty of reasons to be rationally optimistic about the future of the residential real estate industry. Australia is considered a globally desirable destination to live in – as evidenced by our higher share of foreign-born population compared to the rest of the OECD. For example, in 2019, the proportion of our population born overseas was around 30%, more than double the OECD average of 14%1.

Demand for housing will continue to increase as our population grows, with overseas migration playing a fundamental role. In the 2023 financial year, net overseas migration added 518,000 to Australia’s population.2 For the most part these people are “skilled and willed” as demographer Bernard Salt likes to say. In fact, Australia has one of the highest educated migrant populations among OECD countries – about 60% of the migrant population is Australia is tertiary educated, compared to about 40% in other OECD countries.3 Australia’s population growth is also expected to increase substantially from the approximately 27 million we have today, to approximately 30.9 million by 2033-344.

At almost $10.4 trillion5, the value of Australian residential property is about three times larger than the superannuation pool6. It has proven to be a great store of wealth and the Federal Government has an ambitious target to increase this by a further 1.2 million houses in the next five years.7

Finally, an estimated and staggering $224 billion of wealth is set to be transferred from baby boomers every year for the next 25 years8. A large portion of this wealth is held in residential property and that’s both an old and new generation that will need help managing, selling and buying property as this wealth is transitioned between generations.

The volume and value of housing that will be bought, sold and managed is almost guaranteed to rise.


“There are plenty of reasons to be rationally
optimistic about the future of the residential real estate industry. ”

Dean Firth

Head of Business Banking, Macquarie Bank

The context

Firstly, commissions continue to decline. The extent of this decline has been somewhat masked by the constant rise in asset values and the significant rise in transactional volumes during the years of the pandemic. Our benchmarking data shows that sales and property management commissions declined by 19% and 13% respectively between 2012 and 2023.9

Second, this trend is not going to change and is well summed up in these words from Jeff Bezos, founder of Amazon:

I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible.

And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”

Source: Business Insider, 2015

I believe this is totally applicable to the business of real estate agencies. I wonder if the industry is in a 'successful stagnation' moment? There is an urgent need for leaders to acknowledge their business operating models need to be reviewed. Those in the industry that can drive an uplift in the client experience and deliver a productivity dividend at the same time are those most likely to thrive into the future.

No one can predict the future with certainty, but servicing clients more efficiently and cost effectively is one known path to setting your business up for success.

Thirdly, the size of the economic opportunity detailed above will attract attention. Some of those with their eye on the industry could be new entrants to the market, not encumbered by "the way things are done around here.” For example, in October 2023, the CEO of Airbnb said that from next year the online rental company would go beyond its core business, noting that offering rentals for up to a year represented a “huge opportunity.”10 How would that compare to the processes of a typical real estate agency? It’s something that should make you sit up and take notice.

The opportunity

As the incumbents, real estate agencies still have a unique perspective. They are local, they are known in the community, they will often have a relationship with the property owner and Australian home owners to date have valued the role played by real estate agencies.

Looking ahead, it’s clear that lowering your cost to serve in all parts of your business is of critical importance, especially as commissions continue to be compressed. There’s also an increase in regulation, which comes with costs too. This is unlikely to subside as housing becomes a much wider societal issue. Operational efficiency and productivity need to be measured and improve, if you are to thrive in the future.

More thought and consideration needs to be given to who you think of as your clients and how you engage with their increasing expectations whether you view them as buyers, sellers, landlords or tenants. Ask yourself: how do you engage beyond the transaction to build stronger connection and community awareness?

Five ways to drive change in your business

  1. People: Do you have the right people in your business, and do they have the right skills? Don’t be afraid to hire the talent you need, even if that means their experience is different to people you traditionally look for.
  2. End-to-end operating model: If you implement new technology but you’re not changing processes, you’re just adding more cost. You also need to make sure your people are following the new processes.
  3. Digitisation: The real estate industry stepped up on technology when it needed to during the pandemic. Don’t wait for another crisis to do the same again.
  4. Governance: When you set up processes, how can you be sure they’re being followed? My suggestion is measure it – make sure the correct processes are being followed. What gets measured gets done.
  5. Leadership and culture: It’s fine to celebrate gross commission and income, but make sure you’re focused on profit and celebrating the change, the behaviours and processes too. Finally, don’t leave it to chance, embrace the change.

By Dean Firth

Head of Business Banking, Macquarie Bank

To discuss any opportunities for your business, please speak with your Macquarie Bank Relationship Manager or request a call. 


Additional information


1 International Monetary Fund, 2023
2 Australian Bureau of Statistics, 2023
3 International Monetary Fund, 2023
4 Centre for Population, Australian Government, 2023 
5 Australian Bureau of Statistics, 2023 
6 Treasury, 2023
7 Office of the Australian Prime Minister, 2023 
8 Australian Financial Review, Productivity Commission, 2021 
9 Macquarie Bank benchmarking data, 2012-2023
10 Australian Financial Review, 2023 


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